5 Financial Tips to Jump Start Your New Year Journey
We made it! What a year it has been – from supply chain delays impacting cost and shipment to inflation making everyone clutch their purses and wallets a little tighter, we’re here.
This year hasn’t been easy economically and it’s been riddled with uncertainty. Just as we began learning to live with COVID-19 and get back into the swing of life, we were hit with four Federal interest rate hikes, high gas prices, and a competitive housing market.
It’s time to hit the restart button, which means also hitting reset on our financial goals. We don’t know what next year holds, but we can do our best to prepare for whatever the economy throws our way.
Here are 5 financial tips that can get you on the right foot with your finances next year.
Take Inventory of Your Finances
To take your finances to the next level in the new year, evaluate where you are now. You could start by getting out your bank statements, spreadsheets, apps or anything else you use to track your expenses and budget. Take note of where most of your money went throughout the year, new expenses that emerged as the year progressed, and expenses that stopped.
If you set any financial goals at the start of the year, you may also want to explore whether you achieved them and why or why not.
Go Back to The Basics – Review and Reset Your Budget
According to a survey by loan servicing company OppLoans, 73% of Americans don’t regularly budget. While you don’t have to be stringent with your budget, it can be a good way to guide your spending and prioritize important expenses.
Before creating your 2023 budget, review the one you set this year. Ask yourself the following questions during the process.
- Are there any spending patterns I can identify?
- Was there an uptick on spending in a particular category? Why?
- Did I dip into my emergency fund? When and why?
- Are there any recurring expenses that I don’t really need and can cut next year?
- Will I have any new expenses in the new year?
- Is my current budget realistic?
Asking yourself these questions and answering honestly can help you identify your strengths and areas that need improvement. Remember, budgeting isn’t an exercise that should make you feel ashamed–instead, you should feel empowered. Knowing where your money is going can help you strategize and achieve your goals faster.
Set 3 Financial Goals For 2023
We’ve heard the term SMART goals, and it certainly applies here. Take a moment before the year’s end to think of three financial goals you would like to obtain whether it’s paying off consumer debt, having at least 50% of your down payment for your home or buying a new car.
As a quick refresher on how to set SMART goals, they should be specific, measurable, achievable, relevant, and time-bound. An example of a smart goal is saying you want to replenish your emergency fund. By the way, if you did dip into it a few times this year, you shouldn’t feel bad about it as that’s what it’s there for – emergencies. To make this goal smarter, you can specify how much you want to save, how you’re going to do it, and what your timeline is. For context, you could say, I want to increase my emergency fund from $10,000 to $20,000 in 12 months, and I’m going to do that by deducting $833 from my paycheck every month.
It’s also ok to keep your goal list short–don’t feel pressured to have tons. What’s more important is that you write your goals down somewhere and include an action plan for each goal you can refer to throughout the year.
Keep in mind that your goals don’t have to be rigid–you can pivot if circumstances change or you find the goal no longer serves you. Getting an accountability partner to work with throughout the year could also be a way to keep you on the straight and narrow.
Increase Your Retirement Contribution By 1%
If you are not maxing out your 401(k) contribution, which has increased to $22,500 for 2023, then increase your contribution by 1%. For example, if you have been contributing 6% of your salary to your 401(k), increase your contribution to 7%. Although this may seem minimal, it’s an extra percentage that is going towards savings and not spending.
If you notice extra money in your budget, consider increasing your contributions by more than 1%. The more money you put away, the faster you grow wealth.
Shop Around for Large Purchases
You may have some expenses on your list for next year that will cost a pretty penny. Perhaps you want to remodel your kitchen or buy new furniture. Before swiping your card, remember every retail company is pulling for your dollars. Shop around to see if you’re getting the best price for your items or services. You can also check to see if the seller will price match.
Browser extensions like Honey can be helpful when you’re shopping online as they find coupons for you and automatically apply them at checkout. Other helpful browser extensions to try include The Camelizer, Capital One Shopping, and CouponCabin Sidekick.
Whether you’ve had a peasant financial year or a rocky one, you can look forward to starting afresh in a few weeks. Remember that building healthy finances is a long game and the foundation is being intentional about what you want to achieve and staying the course.
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About Rianka R. Dorsainvil
Rianka R. Dorsainvil, CFP®️ is the Co-Founder and Co-CEO of 2050 Wealth Partners a virtual, fee-only comprehensive financial planning firm dedicated to serving first-generation wealth-builders, entrepreneurs, and thriving professionals. Rianka also hosts 2050 TrailBlazers, a podcast aimed to address the lack of diversity in the financial planning profession by engaging industry experts and leaders in conversation.
As an award winning successful, millennial Certified Financial Planner professional, Rianka offers a unique perspective not only on the current state of the financial service industry, but on how to stay relevant in an ever-changing world.
Rianka serves as a member of CNBC’s Digital Financial Advisor Council and CFP Board’s Diversity Advisory Group, is a Forbes Personal Finance Contributor, and has been recognized for her accomplishments and leadership within the industry by leading publications and organizations such as Investment News’ inaugural 2017 Women to Watch Rising Star and Wealth Management’s Ten to Watch in 2018. She has been published in PBS NewsHour, Forbes, USA Today, Black Enterprise, CNBC, Women’s Health, and more.